What is the difference between a Liner & Tramp services ?

Who is a Liner ?

A shipping company who transports goods in containers by sea , with a fixed route and
schedule (timetable) , and with a high level og cargo safety is called a Liner. This is similar to an
air line or bus line(service), on a route with fixed stoppings as per predetermined timetable.
These services will continue to run irrespective of whether the airoplane/bus is full or empty as
they have to strictly keep their timings and route. Similarly cargo liners too have to stick to the
fixed schedule and route irrespective of whether the vessel is full or not.

What is Tramp service ?

The dry bulk and liquid cargoes are generally refered as 'Tramp Trades' and the vessels used to
transport these cargoes are called 'Tramp Ships' . Tramp services will not have a fixed route .
The ships goes from one port to other depending up on the cargo availability. Tramp services
could be compared to a taxi service which is hired to go from one place to another for a single
travel. After completing that trip, next employment must be seeked.

What is chartering ?

Chartering is a term used in shipping for hiring a ship. Depending on the type of ship and the
type of charter, normally a standard contract form called a charter party is used to record the
exact rate, duration and terms agreed between the shipowner and the charterer. There are
various types of chartering , they are

1. A voyage charter is the hiring of a vessel and crew for a voyage between a load port and

a discharge port.

2. A time charter is the hiring of a vessel for a specific period of time;

3. A bareboat charter is an arrangement for the hiring of a vessel whereby no administration

or technical maintenance is included as part of the agreement.

4. A demise charter shifts the control and possession of the vessel; the charterer takes full

control of the vessel along with the legal and financial responsibility for it.
EXPORT DOCUMENTATION AND PROCEDURES

Exporters should seriously consider having the freight forwarder handle the formidable amount of
documentation that exporting requires; freight forwarders are specialists in this process. The following
documents are commonly used in exporting; which of them are actually used in each case depends on
the requirements of both our government and the government of the importing country.

1. Commercial invoice

2. Bill of lading

3. Consular invoice

4. Certificate of origin

5. Inspection certification

6. Dock receipt and warehouse receipt

7. Destination control statement

8. Insurance certificate

9. Export license

10. Export packing list

STEP1: Enquiry :

The starting point for any Export Transaction is an enquiry.

An enquiry for product should, inter alia, specify the following details or provide the following data

Size details - Std. or oversize or undersize

Drawing, if available

Sample, if possible

Quantity required

Delivery schedule

Is the price required on FOB or C& F or CIF basis

Mode of Dispatch - Sea, air or Sea/air

Mode of Packing
Terms of Payment that would be acceptable to the Buyer - If the buyer proposes to open any Letter of
Credit, any specific requirement to be complied with by the Exporter

Is there any requirement of Pre-shipment inspection and if so, by which agency

Any Certificate of Origin required - If so, from what agency.

STEP 2: - Proforma generation :

After studying the enquiry in detail, the exporter - be it Manufacturer Exporter or Merchant Exporter -
will provide a Proforma Invoice to the Buyer.

STEP 3: Order placement :

If the offer is acceptable to the Buyer in terms of price, delivery and payment terms, the Buyer will then
place an order on the Exporter, giving as much data as possible in terms of specifications, Part No.
Quantity etc. (No standard format is required for such a purchase order)

STEP 4: Order acceptance :

It is advisable that the Exporter immediately acknowledges receipt of the order, giving a schedule for the
delivery committed.

STEP 5: Goods readiness & documentation :

Once the goods are ready duly packed in Export worthy cases/cartons (depending upon the mode of
despatch), the Invoice is prepared by the Exporter.

If the number of packages is more than one, a packing list is a must.

Even If the goods to be exported are excisable, no excise duty need be charged at the time of Export, as
export goods are exempt from Central Excise, but the AR4 procedure is to be followed for claiming such
an exemption.

Similarly, no Sales Tax also is payable for export of goods.

STEP 6: Goods removal from works :

There are different procedures for removing Export consignments to the Port, following the AR4
procedure, but it would be advisable to get the consignment sealed by the Central Excise authorities at
the factory premises itself, so that open inspection by Customs authorities at the Port can be avoided.

If export consignments are removed from the factory of manufacture, following the AR4 procedure,
claiming exemption of excise duty, there is an obligation cast on the exporter to provide proof of export
to the Central Excise authorities

STEP 7: Documents for C & F agent :

The Exporter is expected to provide the following documents to the Clearing & Forwarding Agents, who
are entrusted with the task of shipping the consignments, either by air or by sea.

Invoice

Packing List

Declaration in Form SDF (to meet the requirements as per FERA) in duplicate.

AR4 - first and the second copy

Any other declarations, as required by Customs

On account of the introduction of Electronic Data Interchange (EDI) system for processing shipping bills
electronically at most of the locations - both for air or sea consignments - the C&F Agents are required to
file with Customs the shipping documents, through a particular format, which will vary depending on the
nature of the shipment. Broad categories of export shipments are:

Under claim of Drawback of duty

Without claim of Drawback

Export by a 100% EOU

Under DEPB Scheme

STEP 8: Customs Clearance :

After assessment of the shipping bill and examination of the cargo by Customs (where required), the
export consignments are permitted by Customs for ultimate Export. This is what the concerned Customs
officials call the ‘LET EXPORT’ endorsement on the shipping bill.

STEP 9: Document Forwarding :

After completing the shipment formalities, the C & F Agents are expected to forward to the Exporter the
following documents:

Customs signed Export Invoice & Packing List

Duplicate of Form SDF

Exchange control copy of the Shipping Bill, processed electronically

AR4 (original duplicate) duly endorsed by Customs for having effected the Export

Bill of Lading or Airway bill, as the case may be.

STEP 10: Bills negotiation :

With these authenticated shipping documents, the Exporter will have to negotiate the relevant export
bill through authorized dealers of Reserve Bank, viz., Banks.

Under the Generalized System of Preference, imports from developing countries enjoy certain duty
concessions, for which the exporters in the developing countries are expected to furnish the GSP
Certificate of Origin to the Bankers, along with other shipping documents.

Broadly, payment terms can be:

DP Terms

DA Terms

Letter of Credit, payable at sight or payable at... days.

Step11: Bank to bank documents forwarding :

The negotiating Bank will scrutinize the shipping documents and forward them to the Banker of the
importer, to enable him clear the consignment.

It is expected of such authorized dealers of Reserve Bank to ensure receipt of export proceeds, which
factor has to be intimated to the Reserve Bank by means of periodical Returns.

STEP 12: Customs obligation discharge :

As indicated above, Exporters are also expected to provide proof of export to the Central Excise
authorities, on the basis of the Customs endorsements made on the reverse of AR4s and get their
obligation, on this score, discharged.

STEP 13: Receipt of Bank certificate :

Authorized dealers will issue Bank Certificates to the exporter, once the payment is received and only
with the issuance of the Bank Certificate, the export transaction becomes complete.

It is mandatory on the part of the Exporters to negotiate the shipping documents only through
authorized dealers of Reserve Bank, as only through such a system Reserve Bank can ensure receipt of
export proceeds for goods shipped out of this country.

Components of International Financial Environment

October 12, 2012 economistindia Economistindia

International financial system relates to the management of and

trading in international money and monetary assets. These monetary
assets are claims on foreign currency, foreign deposits and
investments and/or foreign assets. The claims may be denominated in
various foreign currencies purchased and sold and involve exchange as
between various currencies. Thus, these transactions give rise to (i)
Borrowing and lending operations in foreign currencies or trading in
financial assets denominated in foreign currencies and (ii) A foreign
exchange transaction involving an exchange of one currency for
another. The first is called the foreign currency market and the second
is the foreign exchange market.
Foreign Exchange Market:
International economic and commercial relations between countries
involve exchange of goods and services and payments for these
exchanges. The payments lead to conversion of one currency into
another. Each country has its own financial system and its own
currency and financial assets. Exchanges between the money and
financial assets of one country for money or financial assets of another
country constitutes international financial transactions. These
transactions are put through the foreign exchange market. The
demand for any currency as against its supply in such markets
determines the exchange rate. These financial assets could be money
or near-money assets, cheques, drafts, mail transfers and other
negotiable instruments.
The difference between the domestic financial system and
international financial system lies in the introduction of exchange of
one currency for another or exchange of one instrument in one
currency for another denominated in a different currency. In the
process of such exchange, the transfer problem arises in the
international markets which relates to the problem of finding the
proper source of supply to suit the demand for any foreign currency.
This leads to an adjustment process in the balance of payments of the
various countries which in turn depends upon the type of international
monetary system in vogue. These will be dealt with in another chapter.
The basic principle involved is that economic and commercial
transactions between one country and another are adjusted by the
corresponding purchase and sale of financial assets, including money
and near-money by one country for that of another country. The prices
of goods and services of one country vis-a-vis the prices of the
corresponding goods and services of another country will determine
the purchasing power of each currency. Exchange rate is primarily a
reflection of the purchasing power of the currency domestically.
Exchange rate fluctuations on a day-to-day basis will depend,
however, upon the competitive forces of demand for and supply of any
currency in these markets. In the short run and long run, exchange
rates would depend upon the relative degrees of inflation in the
domestic economies and changes in the purchasing power of
currencies. Exchanges standard and the international monetary
system would facilitate such adjustment of exchange rates to changes
in supply and demand and to changes in purchasing power parities.
Speculative purchases and sales of currencies and hedge trading in
these currencies would also take place daily and would depend upon
their relative strengths in international markets, market confidence in
those currencies and intrinsic strength of the domestic economies.
The International Monetary Fund was established to facilitate
transactions as between the member-countries and impart an element
of stability in the international monetary scene. Each country can
purchase and sell its currency from the International Monetary Fund
for another currency of the member country to meet its requirements
of international payments for goods and services.
International Currency Markets:
As an adjunct to the exchange markets, there are international
currency markets where internationally accepted currencies, namely,
the so-called reserve currencies, are traded. These relate to the
deposits of such currencies with international banks at an agreed rate
of interest. The excess funds in these reserve currencies owned by
countries, institutions and governments having surplus receipts over
payments would be lent out to banks and other financial institutions
for various durations at a rate of interest. The currencies are in
demand for meeting the balance of payments deficits or for investment
in fixed capital or for working capital purposes.
The other components of the international financial system are
international capital markets and bonds markets. The international
capital markets such as London, New York, Zurich etc. have lost much
of their popularity due to national restrictions and scarcity of funds in
those centres. Bond markets in these centres are still operating and
international banks are arranging these issues on a selective basis.
Now, Euro¬currency and Euro-bond markets are the most popular
international means of medium and long-term financing.
The relations between the foreign exchange market and international
currency markets are not difficult to comprehend. The trade and other
economic and commercial transactions involve receipts and payments
as between countries. These will lead to exchange of one currency for
others. The demand for and supply of each of the currencies against an
alternative currency determines the rate at which two currencies are
exchanged. This is called the exchange rate and the market is the
foreign exchange market. In the process of such economic and
commercial transactions, a country can be a net creditor or a debtor. If
a country is a net creditor or has a positive trade surplus or receives
more than it pays out, it has net foreign claims on others. Such claims
are held in the form of deposits, balances, etc., abroad or investments
in Treasury Bills, Government and Private securities etc. Such claims
would lead to international currency holdings which are generally held
in convertible currencies by the creditor countries for reasons of
facilitating subsequent use and conversion for international payments.
Any market representing the demand for and supply of such
currencies is called the international currency market. While thus the
foreign currency market refers to trading in external dollars or other
currencies held abroad, foreign exchange market refers to the
conversion of such dollars into other currencies. The obvious inter-
relations between these two segments in the international financial
system need no elaboration.
Institutions in International Financial System:
There are a number of institutions who are part of the international
financial system. These institutions can be classified into the following
categories:
• >National banks and domestic financial institutions which deal in
foreign currencies and foreign credits.
• International brokers of repute.
• Regional or multi-national banks or corporations dealing in
international markets and borrowing/ lending in these markets.
• Regional Finance and Development Corporations and banks such as
the Asian Development Bank, Commonwealth Finance Corporation,
Latin American Development Bank, Bank for International
Settlements, etc.
• International financial organisations like International Monetary
Fund (IMF), International Bank for Reconstruction and Development
(IBRD), Internati